Some theories just won't die, even with multiple stakes through the heart and a thermonuclear explosion to boot.

How the World Works was of the opinion that if the global credit crunch proved anything, it was the complete bankruptcy of the idea that the rampant financial innovation of the last decade had dispersed risk more widely than ever before, and thus made the "system" less vulnerable to a shock from any single disruption. When, in fact, the opposite seems clear -- the tangled web of interconnections woven by those incorrigible innovators created an environment where a disruption in one locality, like, say, the subprime mortgage lending sector in the United States, could spread everywhere with astonishing speed and threaten unprecedented systemic collapse.

But I underestimated the power of positive thinking. At Marginal Revolution, Alex Tabarrok, an economist who leans strongly libertarian, argues that if you're going to have massive market turmoil, it's best to distribute it as widely as possible, rather than concentrate it in just one place.

From the frozen lands of Norway's Arctic Circle to the hot sands of the Middle East and the booming metropolis of Shanghai the losses from America's subprime crisis are popping up around the world like angry whac-a-moles. The losses are large and appear larger by being found in the most unexpected of places. Today the focus is on these world-wide losses but I think future historians will focus on how the crisis demonstrated to everyone the power of integrated capital markets to diversify risk.

The losses, of course, are regrettable ... And yet, despite problems with transparency one of those lessons ought to be that the crisis would have been worse if the losses had been more concentrated.

From this perspective, world-wide losses are perhaps the best losses of all.

The italics are mine. And I suppose I agree with the sentiment, if you define "diversify risk" to mean "spread contagion faster than the Ebola virus."